Loan Trust
Clairer263
Member
I have a case where the clients currently have a loan trust with only the wife as settlor, trustee and life assured. They want to recall the loan (less repayments) and use that to fund a standard discretionary trust via a new onshore bond, with an additional investment amount. Both husband and wife will be settlors and trustees and lives assured will be them and their adult children.
I haven't come across one before whether the loan is being recalled and funds reinvested into a new trust and want to clarify the options for the growth on the loan trust, as that is currently outside the estate. Can this be moved to the new trust and remain outside of estate for the benefit of beneficiaries?
Any guidance on options would be much appreciated.
Thank you
Comments
The trust deed will dictate what can be done with the trust funds that are due to the beneficiaries.
But...
Why would they want to recall the loan? They can just get a new loan agreement with the trust, surrender the existing bond add the new loan money and make a trustee application for the new bond with the total sum. I would be willing to bet the existing trust will do absolutely everything the new trust could do. They will be able add new trustees etc. No need for a new TRS entry. Far simpler.
Husband introducing money will complicate matters as you'll be settling the trust in unequal amounts at different times.
Any how that is just a musing your answer to your specific question is in the first line.
We've done a handful of 'gifting of (some or all) of the outstanding loan' within the existing trust structure. As Les has said, can't see why you would want to complicate things by taking money out and starting again.